Correlation Between Zedge and Summit Materials

Can any of the company-specific risk be diversified away by investing in both Zedge and Summit Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zedge and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zedge Inc and Summit Materials, you can compare the effects of market volatilities on Zedge and Summit Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zedge with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zedge and Summit Materials.

Diversification Opportunities for Zedge and Summit Materials

-0.71

Correlation Coefficient

Zedge  Summit Materials

Pay attention - limited upside

The 3 months correlation between Zedge and Summit is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Zedge is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zedge Inc are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Zedge i.e., Zedge and Summit Materials go up and down completely randomly.

Pair Corralation between Zedge and Summit Materials

Given the investment horizon of 90 days Zedge Inc is expected to under-perform the Summit Materials. In addition to that, Zedge is 1.63 times more volatile than Summit Materials. It trades about -0.13 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.16 per unit of volatility. If you would invest  3,905  in Summit Materials on August 21, 2024 and sell it today you would earn a total of  947.00  from holding Summit Materials or generate 24.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Zedge Inc  vs.  Summit Materials

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Summit Materials

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zedge and Summit Materials

The main advantage of trading using opposite Zedge and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge position performs unexpectedly, Summit Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Summit Materials will offset losses from the drop in Summit Materials' long position.

The idea behind Zedge Inc and Summit Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.